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Mergers and Acquisitions in the Global Specialty Chemicals Industry 

  • October 2015
  • -
  • Frost & Sullivan
  • -
  • 39 pages

Summary

Table of Contents

Mergers and Acquisitions in the Global Specialty Chemicals Industry : The Average Cost of Acquisitions is on the Rise in a Seller's Market

This study provides an overview of the mergers & acquisition (M&A) trends in the global specialty chemicals industry. Some of the key industry trends that drive M&A activity are identified and substantiated with quantitative analysis. The approach to quantitative analysis of M&A activity is two-fold. Firstly, analysis is carried out for M&A activities in which specialty chemicals firms transacted in the role of buyers/investors. This is followed by an analysis of M&A activity wherein the industry participants transacted in the role of a seller/target. Insights are provided about the deal volume, deal value, average deal value, and average cost of acquisitions in both approaches. The study period is from January 2010 to August 2015.

Executive Summary

Mergers and acquisition (M&A) activity in the global specialty chemicals industry showed significant regional diversity in terms of deal volume, deal value, and the type of industry segments targeted. North America has been the largest contributor to the overall trends in M&A by deal volume and value.

- The market for M&A has been more favorable for companies transacting in the role of sellers, given the steady increase in sell-side average deal values and the average EV/EBITDA multiple. Although volumes are expected to flatten for both buy-side and sell-side M&A, the average deal values and deal multiples are likely to continue growing.
- Investors in this industry are likely to exploit this M&A wave to yield a higher deal value during exit. This is, however, limited by the growth in deal volumes, which is expected to remain flat. On the other hand, companies are likely to profit more by selling off excess capacities and their non-core assets for higher values.
- In an effort to gain an edge on raw material costs, companies are likely to continue targeting firms dealing in commodity/basic chemicals, energy, and utilities.
- Adhesives, sealants, and industrial coatings emerged as the most lucrative M&A targets in the global specialty chemicals industry. Their wide range of applications and higher scope for product differentiation have driven this trend. Paints, varnishes, and lacquers have shown considerable improvement in deal volume and value during the study period.



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